South Korean battery maker SK Innovation Co. said on Wednesday that it has signed a long-term purchase agreement with battery and technology metals developer Australian Mines Ltd. to receive supplies in cobalt and nickel sulfates. It is the first time for the country’s leading lithium-ion battery manufacturer to forge a direct, long-term deal with an overseas supplier of raw materials used in the production of lithium-ion batteries for electric vehicles.

Under the agreement, SK Innovation will receive an annual 12,000 tons in cobalt sulfate and 60,000 tons in nickel sulfate produced in Queensland from Australian Mines starting 2020. The supply volume would account for about 90 percent of SK Innovation’s cobalt sulfate purchase to run its battery operations. The seven-year contract offers the option to extend another six years, allowing stable supply of up to 13 years.

Shares of SK Innovation ended at 202,000 won ($189.9) on Wednesday, down 0.49 percent or 1,000 won from the previous session, as the partnership had already been factored in.

An unnamed official from SK Innovation said that the latest long-term deal will ensure stable supply of key raw material and defend competitiveness in battery-making against fluctuating price of cobalt sulfate. The price of cobalt sulfate - a key material that accounts for about 30 percent of the cost of battery cathode material used in electric vehicles - has been volatile due to geopolitical concerns in the Democratic Republic of Congo, the world’s largest exporter that holds almost half of the world’s cobalt reserves.

SK Innovation, meanwhile, is also considering capital investment in Australian Mines stake based on exclusive negotiation rights obtained from the latest deal. The company will first review results of the bankable feasibility study that is currently being conducted jointly with a financial institution based on reserves held by Australian Mines and its overall business feasibility.